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Questions of jurisdiction, responsibility may foreshadow legal trouble for new EPA power plant rule

Source: Nathanael Massey, E&E reporter • Posted: Monday, June 9, 2014

U.S. EPA’s proposed rule for power plant carbon gives states wide latitude in controlling their emissions, embracing fuel switching, renewable energy and energy efficiency as building blocks on the path to carbon reduction. Given the pervasiveness of carbon dioxide as the result of modern power generation, that “all of the above” approach will be needed to meet the agency’s stringent reduction targets, experts say.

At the same time, they caution, the approach may prove to be the rule’s legal Achilles’ heel.In the early days of the Clean Air Act, regulation of pollutants was typically limited to “bolt-on” controls at the point of emissions — an interpretation that has, with few exceptions, continued to the present day. EPA’s departure from that precedent will likely be an early target for lawsuits once the rule is completed next year (ClimateWire, June 3).But EPA has a strong argument of its own, said Conrad Schneider, advocacy director for the nonprofit Clean Air Task Force.

EPA “isn’t working from a blank slate here,” he said. Prior to the draft rule’s release, states had been working outside the fence line for years, implementing regional carbon markets, renewable portfolio standards, energy efficiency programs and integrated resource planning. All over the country, utilities have been switching from coal to gas, primarily due to the latter’s current low price.

“The building blocks [EPA] identified are set on foundations that the states have already laid, and I don’t think they could have ignored that — legally ignored that — and claimed they were using the best system of emissions reduction” mandated in Section 111(d) of the Clean Air Act, he said.

If they had, “we certainly would have challenged them,” he added. “And I think they would have been very vulnerable to that challenge.”

Who gets stuck with the bill?

A more pressing question may be where, within a given state, the responsibility for new renewable energy and energy efficiency falls.

In the past, in cases where pollution controls were limited to regulated power plants, plant operators could be held liable if they failed to meet mandated targets. Extending pollution controls to grid-scale demand-side energy efficiency and renewables, though, leaves the question of responsibility vague.

“The EPA’s work-around for this is to give states the option to be responsible,” said Nathan Richardson, an attorney and researcher at Resources for the Future. Essentially, states will have the ability to impose legal obligations on nonregulated entities, be they industrial facilities, energy efficiency programs or a different type of participant, he said.

And in that, “I think they’re skating on thin ice,” Richardson said. “I don’t see the authority in the statute.”

Challenges along these lines are all but inevitable given the controversial nature of the rule. But even in the event that a suit successfully finds fault with EPA’s outside-the-fence-line approach, that won’t be the end of the rule itself, said Schneider.

“Each of the EPA’s building blocks is legally severable,” he said. “If a court rules that energy efficiency is outside the box, the rule can still stand. Even if only the first two building blocks” — at-the-plant heat rate improvements and coal-to-gas fuel switching — “survive, the rule survives.”

And if opponents of the rule do manage to lop off the latter two building blocks, they’re ultimately limiting their own options to attain emission cuts cost-effectively, said Richardson.

“If you challenge that approach successfully, you have less room to comply” with the emissions rate targets, he said.